Asian stock markets inched higher early Monday as trade tensions between the United States and Canada cooled down to some extent. Canada agreed to scrap its digital services tax to break an impasse in trade negotiations. The new deadline for 'reciprocal tariffs' is July 21, with the aspirations to secure broader trade deals by Labor Day in September.
Japan's Nikkei surged 1.6%, and South Korea's market gained 0.8%. Chinese blue-chip shares inched up 0.2% based on modest improvements in factory and service data. Even with a bit of a pullback, MSCI's index of stocks in the Asia-Pacific region, excluding Japan, was only 0.2% lower. U.S. futures remained positive, with the Nasdaq up 0.4% and the S&P 500 up 0.3%, indicating that tech remained popular. In Europe, futures were also up.
Markets Watch U.S. Jobs and Fed Signals
Investors are now focused on U.S. payroll data, which is expected to come early due to the July 4 holiday. Analysts anticipate nearly 110,000 more jobs and the jobless rate increasing to 4.3%. A soft report could increase chances of a Fed rate cut in July, rather than in September. On Friday, the S&P 500 and Nasdaq set record highs, adding 0.5 %, while the Dow rose 1 %. Data from recent jobless claims and consumer data appeared to indicate that the job market is slowing, a further argument for future rate cuts. Fed Chair Jerome Powell is also scheduled to speak at the ECB forum this week, potentially providing a clue to the Fed's next step.
Dollar Declines, Oil Struggles, and Gold Steady
The dollar weakened ahead of what some traders expected to be faster rate cuts. The euro held near its highest since late 2021 at $1.1727, and the British pound was close to $1.3722. The yen rose and the Canadian dollar gained on some trade optimism. The dollar index was down at 97.146. Yields on U.S. government bonds were little changed, with the yield on the 10-year note sitting at 3.28%.
Oil prices remained soft as concerns over increased output from OPEC+ were a drag on the market. Brent fell to $67.50, and U.S. crude declined to $65.09. Both benchmarks are over 10 % lower for the week. Gold was flat at $3,279 an ounce, below its April high.
